Monday, January 31, 2011

As the coming hours stretch into days, many, many learned lawyers will likely make this point more eloquently, and forcefully than I have, below -- but here is the gist of it: Judge Vinson has ignored the fact that Congress exercised an enumerated power, in adopting the insurance mandate -- the power to tax and spend. Here is the text of his trial court level ruling.

In December 2010, Judge Vinson rejected the idea that the insurance mandate was a tax, even though Congress directly enacted it as an amendement to the Internal Revenue Code. In so doing, he simply assumed away the case. I will all but guarantee that the Supremes will not take this Vinson route -- for to do so would be to impliedly invalidate many other plainly Constitutional tax and spend schemes. I now pretty firmly expect that Chief Justice Roberts will be the fifth (and deciding) vote for the consitutionality of the insurance provision -- as a rationally-related taxing measure.

Even so, Judge Vinson's opinion does a better job of analyzing the "necessary and proper" clause than Judge Hudson's did. Judge Vinson still make an obvious -- and clearly fundamental -- error (though I suspect Vinson's error/omission is intentional, while Judge Hudson's opinion, on the other hand, seemed blissfully unaware of this entire line of reasoning).

So -- to be clear -- Judge Vinson conveniently ignores that the power to tax and spend are enumerated powers for the Congress -- and that then it is plain under Wickard v. Filburn, 317 U.S. 111 (1942), and its progeny -- that Congress may use all necessary and proper means to acheive an enumerated end. Full stop.

. . . .It is, in any event, a bedrock notion of constitutional law (since McCulloch v. Maryland) that whatever Congress has an emumerated power to acheive, it may do so by all necessary and proper channels, viz:

. . . .Although, among the enumerated powers of Government, we do not find the word “bank” or “incorporation,” we find the great powers, to lay and collect taxes; to borrow money; to regulate commerce; to declare and conduct a war; and to raise and support armies and navies. The sword and the purse, all the external relations, and no inconsiderable portion of the industry of the nation are intrusted to its Government.

Let the end be legitimate, let it be within the scope of the Constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the Constitution, are Constitutional. . . .

-- McCulloch v. Maryland

All that need be shown, then, is that the tax is rationally related to a legitimate end Congress is seeking. . . .

The latest line has (oddly enough!) Chief Justice Roberts voting to uphold the mandate -- as a legitimate exercise of the power to tax (based on his joining Breyer in Comstock last term, without any additional comment). In Comstock, Roberts might have joined the concurrence of Justice Alito, or even the dissent of Justice Thomas, at least in parts -- but he didn't. So, it seems Roberts is a believer in a "BIG" reading of the power in "Necessary & Proper" -- when the power being exercised is an enumerated one. So, buckle up, folks. . . .

Prediction: Vinson and Hudson will be overruled -- their flawed opinions read the entire "enumerated powers" mechanism out of the analysis -- something some combination of Justices Roberts, joined by Ginsburg, Kennedy, Breyer, Sotomayor and Kagan (or all of them, together) simply will not do.

The law -- as signed by the President -- will pas muster; it will stand. You read it here first.

~~~~~~~~~~~~

This really doesn't fit well into my larger points, above, but I think it important to note that a good chunk of Judge Vinson's opinion rests upon hypotheticals (pp 46-48), rather than actual facts. To suggest that this law might lead Congress to decide to force people to eat wheat bread, or broccoli or buy GM cars -- borders on the transparently specious.

Congress has done no such thing -- and that it might, in the future, cannot be the basis for invalidating this law -- which says nothing about wheat, broccoli or GM cars.

Finally, Wickard concerns whether wheat farmers may subvert the wheat market -- not whether one must eat wheat. I am regularly surprised when educated people nod their heads at such illogical arguments.

The company itself last said (on pain of SEC liability) that it "expected full year 2010 non-GAAP EPS to be between $3.27 and $3.41, excluding certain items and a 2010 GAAP EPS range of $1.15 to $1.50." Do stop back:

Friday, January 28, 2011

. . . .Before the Court is Merck's request to preclude certain testimony by an expert witness for the Plaintiffs. In a letter to the Court dated January 28, 2011, Merck requests that the Court preclude Plaintiffs' expert, Dr. Robert Marx, "from offering new, undisclosed opinions based on" materials reviewed by Dr. Marx after the submission of his Rule 26 expert reports in this case. (Defendant's Letter, at 1.) Merck argues that Dr. Marx revealed previously undisclosed expert opinions at his January 21, 2011 deposition, and based these opinions on "updated" versions of pathology reports first revealed to Merck at the January 21 deposition. (Id. at 2.) Merck objects to any testimony offered by Dr. Marx that is based on materials which Merck did not have an opportunity to review in advance of the January 21 deposition.

In his letter in response dated January 28, 2011, counsel for the Plaintiffs argues that Merck's request raises an issue "best presented not as a letter brief but rather as a Daubert challenge or motion In limine." (Plaintiff's Letter, at 2.) Counsel for the Plaintiffs also stated that he would be willing to produce Dr. Marx for yet another deposition, in order to prevent undue prejudice to Merck. (Id.)

The Court agrees with counsel for the Plaintiffs that the presentation of this dispute by way of a letter brief is inappropriate in light of the current briefing schedule for Daubert and in limine motions. Merck's request to preclude the testimony is DENIED at this time. Any undue prejudice suffered by Merck as a result of Dr. Marx's reliance on the pathology reports at issue may be obviated by an additional deposition of Dr. Marx. Therefore, Plaintiffs are directed to make Dr. Marx reasonably available for deposition if requested by Merck.

The parties are directed to submit no further correspondence related to these matters by way of letters to the Court; any outstanding issues relating to the admissibility of evidence before trial will be decided by the Court in the parties' Daubert motions or motions in limine.

Beyond the at least 30,000 worldwide layoffs over just the past three and a half years (legacy Schering-Plough and Merck combined), there are the "tertiary" economic contractions -- in the smallish "company" towns, that play host to the former Schering-Plough facilities. Facilities that are slated for reduction, sale or demolition.

. . . .Mike Rannigan shakes his head and digs his hands deep into his pants pockets when he thinks about the many Merck employees who will probably no longer eat the hot dogs and burgers he serves at the Galloping Hill Grill, a landmark eatery located at the busy Five Points intersection in Kenilworth.

Over the next 12 to 18 months, more than 1,400 jobs at the Merck facility less than a mile down the road will start disappearing as the pharmaceutical giant continues the process of consolidating [Schering-Plough]. . . .

In Kenilworth, though, the pain is going to be outsized. Roughly 900 legal, marketing and other administrative positions will gradually be transferred to Merck headquarters in Whitehouse Station and a few other sites scattered around the state. And about 580 manufacturing jobs will leave New Jersey entirely as some operations are moved to other parts of the country. This adds up to more than half of the 2,600 people who currently work there. . . .

Do go read it -- and mourn the "collateral damage" of this transaction. One that (apparently, thus far) did little more than put over 30,000 people out of work, and hand an aggregate of some $500 million to "Fast" Fred Hassan, Carrie Cox, Bob Bertolini, Tom Sabatino, Tom Koestler and Raul Kohan.

Thursday, January 27, 2011

After several rounds of public commentary -- and resulting revisions -- yesterday, the SEC adopted revised executive compensation disclosure rules. These new rules are applicable to all public companies --regardless of size [even when the same engage in so-called "going-private" transactions (closing a previous loophole), and then thus retreat to the darkness of no additional public disclosures].

The rules, as amended, now require much clearer table-format disclosures of golden parachute driven projected-payments, and require at least advisory polls of the shareholders -- or, a "say on pay" -- per the final rule's adopting release:

. . . .We are adopting amendments to Item 5 of Schedule 14A, as well as other forms and schedules, to implement and supplement the requirement of Section 14A(b)(1) to provide disclosure of golden parachute compensation arrangements in a clear and simple form. Under the amendments, all companies will be subject to the same golden parachute disclosure requirements. As amended, Schedule 14A will require the disclosure pursuant to Item 402(t) of Regulation S-K with respect to golden parachute compensation arrangements for merger proxies. Though much of the disclosure required by our amendment to Item 5 of Schedule 14A is currently required for all issuers, regardless of size, under our amended rules such disclosure will be required to be included in a tabular format pursuant to Item 402(t) of Regulation S-K, which will include an aggregate total and specific quantification of various compensation elements. All companies, regardless of size, will also be subject to these additional disclosure requirements in connection with other transactions not required by Section 14A(b)(1), including certain tender offers and Rule 13e-3 going-private transactions.

In addition, our amendments will require clear and straightforward disclosure of issuer’s responses to shareholder advisory votes, and of golden parachute compensation arrangements in connection with mergers and similar transactions. We have used design rather than performance standards in connection with the amendments because, based on our past experience, we believe the amendments will be more useful to investors if there are specific disclosure requirements. The amendments are intended to result in more comprehensive and clear disclosure. In addition, the specific disclosure requirements in the amendments will promote consistent and comparable disclosure among all companies. . . . .

Now, to connect the above new rules, to the late 2009 bust-up of Schering-Plough by Merck. . . per this story, we learned in 2009 that Gary Lawson, head of global compensation and HRIT at Schering-Plough,was retiring in late 2009. That was particularly interesting, especially since he was a recent high-ranking alum of Wyatt Wheeler.

Of course, Hans Becherer was the Chairman of Schering's Compensation Committee of the Board -- he oversaw CEO Hassan's pay, and bonus opportunities. Very. Cozy. [Finally, per the link, he is personally a named defendant in Cain v. Hassan -- the putative ENHANCE "ERISA Breach of Fiduciary Duties" and shareholders' derivative actions.]

Moral of this story: when public companies don't restrain themselves (especially as to mulitple hundreds of millions of dollars in golden parachute pay to CEOs who so mismanage a company that there is no real alternative, except to solicit, and then accept, a low-ball bust up bid), the SEC will step in and do it for them.

~~~~~~~~~~~~~~~~~* The increase is due to post-bust up increases in New Merck stock values on the NYSE (from $26, to around $33).

Back in January through March of 2010, as the healthcare reform measure was wending its way through Congress, Mr. Obama (sagely) made a decision to side-car the reform of abusive pharma "pay for delay" deals. That bought the support of pharma for closing the donut hole, and brought them to the table as advocates, rather than opponents. In short, the President wisely chose to "keep the powder dry, for another day". It seems that day is now approaching.

Back then, I suggested, then repeated predicted that this initiative would be reintroduced in 2011 -- once the heavy lifting of what became known as the Affordable Care Act was complete -- i.e., became law. Well.

It is Janauary 2011, and Senators Kohl and Grassley have reintroduced the reform of pharma's "pay for delay" provisions, as a new bill (a PDF format file). The law would require pharma CEOs to certify to the FTC, and the DoJ that the deals -- as written, are exactly the deals, as executed, and enforced -- thus avoiding the current "wink and nod" routines between generic- and branded-manufacturers:

. . . .The purposes of this Act are — (1) to enhance competition in the pharma1ceutical market by stopping anticompetitive agreements between brand name and generic drug manufacturers that limit, delay, or otherwise prevent competition from generic drugs; and (2) to support the purpose and intent of antitrust law by prohibiting anticompetitive practices in the pharmaceutical industry that harm consumers. . . .

The Chief Executive Officer or the company official responsible for negotiating any agreement required to be filed under subsection (a), (b), or (c) shall execute and file with the Assistant Attorney General and the Commission a certification as follows: ‘I declare that the following is true, correct, and complete to the best of my knowledge: The materials filed with the Federal Trade Commission and the Department of Justice under section 1112 of subtitle B of title XI of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, with respect to the agreement referenced in this certification: (1) represent the complete, final, and exclusive agreement between the parties; (2) include any ancillary agreements that are contingent upon, provide a contingent condition for, or are otherwise related to, the referenced agreement; and (3) include written descriptions of any oral agreements, representations, commitments, or promises between the parties that are responsive to subsection (a) or (b) of such section 1112 and have not been reduced to writing.". . . .

A very good step -- one very much in the right direction, as sunshine is often the best antiseptic. We will keep you informed. A sincere H/T the gentleman Ed Silverman, at Pharmalot. [Click image, above right, for a story on how the proposed CEO certification provisions might change things -- as obviously, failing to fully disclose the whole arrangement to DoJ/FTC would have both criminal (and civil) consequences -- for the involved CEOs.]

Wednesday, January 26, 2011

Yesterday, the very able federal trial Judge John F. Keenan, in Manhattan, has denied Mrs. Secrest (on a request for an emergency reconsideration motion) the right to re-depose the medical experts retained by Merck -- on specific causation -- in this particular Fosamax® ONJ case, thus:

. . . .The efficiency afforded by the MDL process depends on the ability to distinguish between general MDL-related factual andlegal determinations and case-specific determinations. Permitting either party the opportunity to re-depose general causation experts at the outset of every bellwether trial would greatly diminish the efficiency of the MDL process. . . .

Because it fails to meet the requirements of Local Rule 6.3, the Plaintiffs' motion for reconsideration of the January 14, 2011 Order is DENIED.

SO ORDERED.

Dated: New York, New YorkJanuary 24, 2011. . . .

We'll cover this -- in more detail -- starting March 14, 2011, but this often makes for more "fireworks", in the courtroom -- during trial. Afterall, the surprise cross is often a very-effective truth-getting engine. All of that said -- Judge Keenan's ruling is the correct one, from the perspective of keeping the MDL process orderly.

There are probably more than ten million people, worldwide, who have been spared the exquisitely-torturous pain, and ultimately, complete blindness brought on by a common water born parasite, due in large part to Mr. Horan's visionary support of Merck's ivermectin program. Now, that's a legacy.

He has passed peacefully at age 90 in Sea Girt, New Jersey; and was a giant in the "Camelot" days of pharmaceuticals discovery and development. He will be missed.

These (below) are the sorts of accomplishments we should all hope to be eulogized for, after nine wonderful, productive decades on the planet (from Merck's press release, of yesterday):

. . . .John J. Horan. . . died on Saturday, January 22, of natural causes. He was 90 years old. Mr. Horan served as chairman of the Board of Directors and chief executive officer of Merck & Co., Inc., from 1976 to 1985. By the end of his tenure, Merck had grown into the largest pharmaceutical company in the world and would soon become the most admired company in America on Fortune magazine's well-known list.

Horan was instrumental in supporting Merck research that led to the development of ivermectin, a medicine to help prevent and treat the devastating tropical disease known as river blindness, and a long running global partnership with a range of governments, intergovernmental agencies and non-profit organizations that serves as the pioneering model for governmental and business cooperation in humanitarian efforts in developing nations.

Upon his retirement as Merck's CEO, Horan continued to serve as a member of the Board of Directors and as its vice chairman until 1993. He earlier served as the company's president and chief operating officer. . . .

In sum, he led Merck in a time when -- and with a vision that -- if the science was put first, the money would generally care of itself. And it did.

Those times have passed -- for the world is too complicated now, to return to such a simple drug discovery model -- but it is well to remember these philosophical roots.

Tuesday, January 25, 2011

Truly, I mean no offense to the fine people at Charles River Labs, but it does seem quite appropriate -- that Mr. Bertolini is now overseeing a vast labyrinth of. . . lab rats.

More seriously, and actually, more germane to Mr. Bertolini's career, post Schering-Plough, is the notion that the investors are here lobbying for a "liquidity event."

I am thinking here, about the latest on Genzyme/Sanofi -- where Bob also holds a seat -- right? It is no coincidence that Relational Investors holds a big stake in Genzyme. . . and also holds a large stake in Charles River Labs (over 6 percent of all outstanding shares). Now Bob Bertolini is their guy, on both boards. Will he get the Audit Committee chair here, too -- as he has at Genzyme? We'll see.

In any event, here is a bit of the Wall Street Journal's rundown, and perspective -- do go read it all:

. . . .Pharmaceutical research firm Charles River Laboratories International Inc. is replacing two board members after facing pressure from investors critical of the company's capital-allocation plans.

Robert Bertolini, former chief financial officer of Schering-Plough Corp. and a board member at Genzyme Corp., and Richard Wallman, former CFO of Honeywell International, will become Charles River board members. . . .

Charles River consulted on the new directors with hedge fund Jana Partners LLC, the company's biggest shareholder with about an 8.5% stake, and investment fund Relational Investors LLC, which has about a 6% stake. Both investors want Charles River to improve the way it spends the company's capital after expansion plans faltered.

Jana and Relational opposed Wilmington, Mass.-based Charles River's $1.6 billion deal to buy China's WuXi PharmaTech last year. Because of investor opposition, the companies terminated their agreement and Charles River had to pay a breakup fee of $30 million to WuXi. The company also announced a $500 million stock repurchase program.

Shareholders believed Charles River was paying too much for the Chinese company, and that there were high execution and integration risks. . . .

We will keep you posted, but it seems that Bob "The Sandman" Bertolini is collecting board seats where a bust-up or take-out is the larger institutional investors' chief goal (again, look at Genzyme/Sanofi and Ralph Whitworth's Relational Investors, here).

Monday, January 24, 2011

This morning, while maintaining its overweight rating generally, Barclays (recently, an indirect holder of over 5% of all of Merck's outstanding stock) lowered its 12 month price target from $43 back to $41 -- just $1 over where Barclay's target was one year ago.

If it turns out that Barclays has dropped below the 5 percent threshhold, in its next SEC Schedule 13 filing (or in Merck's next proxy, whichever first appears), we ought to all agree that the target was upped, in part, to allow for higher exit prices, for Barclays, as it liquidated some of its outsized Merck position, on the NYSE and through off-exchange blocks.Thus -- per TheStreet.com:

To refresh the readership -- here was my full piece on the plainly "conflicted lifting" of the price target, just about one year ago, now:

On January 29, 2010, BlackRock, Inc. as acquiror of various Barlcays Global Investors entities, filed an SEC Schedule 13G, disclosing that the companies held aggregated long positions (as of December 31, 2009) of 5.29 percent of all the New Merck Common Stock outstanding on that date.

. . . .This Amendment to Schedule 13G this "Amendment") is filed by BlackRock, Inc. ("BlackRock"). It amends the most recent Schedule 13G filing, if any, made by BlackRock and the most recent Schedule 13G filing, if any, made by Barclays Global Investors, NA and certain of its affiliates (Barclays Global Investors, NA and such affiliates are collectively referred to as the "BGI Entities") with respect to the subject class of securities of the above-named issuer. As previously announced, on December 1, 2009 BlackRock completed its acquisition of Barclays Global Investors from Barclays Bank PLC. As a result, [substantially all of] the BGI Entities are now included as subsidiaries of BlackRock for purposes of Schedule 13G filings. . . .

The analyst boosted its price target for MRK, which had closed at $36.59 on Monday, to $43 from $40. Barclays also raised its 2009 and 2010 earnings estimates to $3.26 and $3.48 per share, respectively, while maintaining its “Overweight” rating on the stock. . . .

UPDATED: Sixteen days ago, Bayer Healthcare advised the world -- via press release -- that there was a possible sterility problem -- with select runs of Triad-manufactured alchohol pads and swabs (kitted with some Bayer meds, but not manufactured by Bayer).

Similarly, eleven days ago, Genentech (now a Roche affiliate) issued a press release, to be sure the world knew about the Triad recall of alchohol swabs and pads -- co-packaged as kits, with some of Genentech's products. All of the companies -- including Merck -- were handed this information no later than January 6, 2011 -- or over 18 days ago, now.

Yesterday, while the Jets and Bears were losing, Merck finally got around to putting out a Pegintron®-involved press release -- for the same potential problem:

. . . .The Triad Group recall impacts the alcohol prep pads that are co-packaged and distributed with the Merck medicines Pegintron® (peginterferon alfa-2b) single dose RediPen® and Pegintron® vials for markets in Europe, Asia Pacific (excluding Japan), Latin America (excluding Brazil) and Canada, and Intron® A (interferon alfa-2b) Multidose RediPen and Intron A Solution vials for markets in Europe, Asia Pacific (excluding Japan) and Latin America (excluding Brazil). Merck medicines distributed in the United States are not impacted by the Triad Group recall.

According to information posted on the Food and Drug Administration's (FDA) Medwatch website, the recall was initiated by the Triad Group due to concerns about potential contamination of the products with the bacteria, Bacillus cereus. According to the FDA communication, use of the contaminated alcohol pads, alcohol swabs, and alcohol swabsticks could lead to life-threatening infection especially in at-risk populations, including immune-suppressed and surgical patients. . . .

To win back the previously squandered trust (primarily, the trust squandered on the legacy Schering-Plough side of the house), this truly-massive pharma organization (the No. 2 in the world!) is simply going to have to become more nimble in its communications program -- there is little doubt about it.

Whitehouse Station needs to be doing it faster, and better, than the others -- given that it decided to splash itself with the legacy Schering-Plough "eau-de-scandale".

Sunday, January 23, 2011

Recently, the Commonwealth of Massachusetts filed a memo of law to support a nearly quarter-billion-dollar finding, against New Merck/Legacy Schering-Plough/Warrick Pharmaceuticals -- as a result of what a federal jury found was pricing fraud, on Proventil®, the brand name by which a Schering-Plough acquired company sold albuterol -- here is just some of it:

. . . .Defendants [including New Merck] are in psychological denial regarding their conduct, the jury’s findings, and the facts and law relevant to the imposition of penalties in this case. In their Response to the Commonwealth’s Motion for Entry of Judgment, Defendants assert that, ‘[a]t most…this is a case of negligence.” Dkt. No. 953, (“Defts’ Response”) at 26. In fact, the Court expressly instructed the jury that negligence would not support liability, and the jury found Defendants liable on all counts. In an attempt to minimize the egregiousness of their offense conduct, and thereby avoid substantial penalties, Defendants repeatedly, and falsely, assert that what they are charged with doing wrong in this case is failing to ensure that First Data Bank (FDB) deleted their launch prices from its electronic database, as they requested. Defts’ Response at 2. What the jury found, however, as a matter of fact, was that Defendants knowingly published false prices and acted “with the specific intent to disobey the law.” 9/28/10 Tr. 134:8-10. Defendants posit a hypothetical, never presented to the jury, and without evidentiary support in the record, that the only alternative to their false WAC prices would have been “no WACs,” and argue they caused no economic harm to the Commonwealth. Defts’ Response at 5-7. What the jury found, however, based on the evidence presented at trial, was that Defendants proximately caused $4.6 million in damages to the Commonwealth. Dkt. No. 934 (“Verdict Form”), Question 6.

In ruling on this Motion for Entry of Judgment, the Court must decide whether to apply the plain meaning of the Massachusetts False Claims Act (MFCA) and hold the Defendants liable for penalties for the false claims they caused to be presented to MassHealth. This Court must further decide whether the $191 million in requested penalties, which is less than four percent of the minimum penalties mandated by the MFCA, is “grossly disproportional” to the gravity of Defendants’ offenses. In making that decision, the Court must compare the requested penalties with Defendants’ actual offense conduct, as found by the jury, not Defendants’ post-verdict version of their wrongdoing. . . .

. . . .The jury found that Defendants did act “knowingly and willfully’ in violation of the MMFCA. Thus, Defendants’ assertion that this case is, “at worst,” a negligence case is flatly contradicted by the jury’s verdict. . . .

While it is true that MassHealth’s regulations did not require Defendants to publish a WAC price, that fact is of no consequence to the damages caused in this case. Defendants did in fact publish a WAC. Having made that choice, Defendants assumed a duty to correct their reported prices that were inaccurate, incomplete or misleading when made. Backman v. Polaroid, 910 F.2d 10, 16-17 (1st Cir. 1990). As set forth above, the Commonwealth presented extensive evidence at trial that Defendants’ direct prices at launch were misleading when made. The Defendants have conceded, based on this evidence, the jury could have concluded that Warrick’s direct prices were misleading. See Defendants’ JMOL Reply (Dkt. No. 943)(“JMOL Reply”) at 15, n. 9. Accordingly, there is no dispute that Defendants had a duty to correct their published prices. Backman, 910 F.2d at 16-17. . . .

Schering-Plough was aware, beginning in October 1997, that multiple law enforcement authorities were investigating its price reporting practices. CW’s Memo at 5-6. Each year, Schering-Plough received a request from FDB to update and correct Warrick’s reported prices. Each year, Defendants did nothing to correct Warrick’s illegal false prices. . . .

Schering-Plough pled guilty in 2004, and again in 2006, to felony criminal offenses which defrauded the Medicaid program nationwide, including MassHealth. CW’s Memo at 6-7. In 2008, Merck & Co., Schering-Plough’s merger partner, agreed to pay $650 million to resolve claims that it had defrauded Medicaid nationwide, including MassHealth. Id. at 7. Evidence that a defendant has repeatedly engaged in prohibited conduct provides relevant support that “strong medicine is required to cure the defendant’s disrespect for the law.” BMW, 517 U.S. at 576-77 (“a recidivist may be punished more severely than a first offender”). . . .

We will keep you posted, but when the judgment is entered, with interest it will very-likely eclipse $250 million.

Saturday, January 22, 2011

Matt Herper is usually pretty solid -- well grounded -- in his perspective pieces on pharma science news. This one, however, clearly stands out.

For my money, Mr. Herper gets it "perfectly on pitch", here. After all, it is not just that it would be manifestly unfair to saddle a month on the job CEO with the setback of a drug candidate (which was, of course, wildly hyped by his former boss's merger-partner's CEO). Wait, did 'ya get all that? -- I mean "Fast" Fred Hassan (and Carrie S. Cox), here.

More than that, it is also true that at Merck (with its much tighter research procedural ship, than legacy Hassan's) -- it would be shocking if data from any clincial trial was "leaking out, early" to Merck's executive team, nefariously.

And so, under the most-modern clinical trial agreements (like those signed by Whitehouse Station's CSO), blinding/no-leak procedures are air-tight -- save for safety signals -- which are reported to an independent, non-company-affiliated panel. That's exactly what happened with Vorapaxar -- the DSMB shot off a flare, on safety-concerns. There were -- I am willing to (speculatively) wager -- less that 24 elapsed hours between the DSMB's call, and Merck's downbeat webcast, on the following morning.

So -- don't blame Ken Frazier for this -- unless and until someone comes forward with proof that Fred Hassan told both Dick Clark and Ken Frazier that the illicit Schering-Plough "African drumbeat" networks (long known to exist, but never conclusively proven to reach K-1) were already reporting excessive brain-bleeds in the TRA trials, prior to, or by November 3, 2009. [That was Schering-Plough's last day as an NYSE traded company; note that only a few days later, one of the main TRA clincial trials completed enrollment -- on November 13, 2009.]

In any event, do go read Matt's piece -- it is perfect -- and great read for a snowy weekend morning (with your coffee, of course):

. . . .I think this is a natural response to the vorapaxar setback, which robs Merck of what could have been one of its biggest stock catalysts. But this isn’t Frazier’s fault. He has not hyped vorapaxar, and he better have been caught off guard by the bad news, because otherwise there would be a serious problem with the vorapaxar clinical trials. . . .

Friday, January 21, 2011

This one just. simply. slipped. my. mind. honestly. The first state court trial -- on a Fosamax® ONJ claim -- will get underway in Atlantic City, New Jersey next week. It is being tried to a jury. We'll report on the verdict, when it is delivered -- but deeply-detailed daily records aren't available online (yet), as a general matter, in the state courts of New Jersey. Accordingly, we won't have the blow-by-blow reporting we usually offer, on the federal court Bellwether Fosamax ONJ trial diaries -- a box-car style series of six test trials -- presently playing out in Manahattan. In any event, here's The Street.com's item on next week's Rosenberg v. Merck case:

. . . .Plaintiff Alison Rosenberg claims that her jaw problems resulted from the use of Fosamax, and Merck's failure to timely warn of the risks. Merck claims that the harm to Ms. Rosenberg's jaw was caused by other health problems and medications. . . .

We should also hear any day now on the Boles III Fosamax ONJ "damages-only" re-trial date -- from the very able federal Judge John F. Keenan, in Manhattan. Do stay tuned.

Momenta has added Tom Koeslter -- the guy executing the science behind legacy Schering-Plough's Vorapaxar (that would-be, at-one-time successor to Plavix®'s franchise, the same one which just turned up with some brain-bleed issues in two studies, in stroke patients, at least). Interesting.

Momenta must be hoping (at least in part) that adding Dr. Koestler to the board will give them practical insights on their proposed anti-coagulant, M118, a low molecular weight heparain design-concept. From the press release, and the M118 webpage, then:

. . . .Momenta Pharmaceuticals, Inc., a biotechnology company specializing in the characterization and engineering of complex drugs, announced the appointment of pharmaceutical veteran Thomas P. Koestler, Ph.D. to its Board of Directors. Currently serving as Executive-in-Residence at Vatera Holdings LLC, Dr. Koestler is the former Executive Vice President of Schering-Plough. . . .

~~~~~~~~~~~~

. . . .We believe that M118 has the potential to provide baseline anticoagulant therapy for patients diagnosed with ACS who are medically managed and who may or may not require coronary intervention in order to treat their condition, as well as for patients diagnosed with stable angina who require a coronary intervention. We believe that the properties of M118 observed to date in both preclinical and clinical investigations continue to support the design hypothesis and may provide physicians with a more flexible treatment option than is currently available. ACS includes several diseases ranging from unstable angina, which is characterized by chest pain at rest, to acute myocardial infarction, or heart attack, which is caused by a complete blockage of a coronary artery. Currently, a majority of patients are initially medically managed with an anti-clotting agent, such as LMWH or unfractionated heparin, or UFH, in combination with other therapies. An increasing proportion of ACS patients are also proceeding to early intervention with procedures such as angioplasty or coronary artery bypass grafting, or CABG. Both angioplasty and CABG require anticoagulant therapy to prevent clot formation during and immediately following the procedure. . . .

Thursday, January 20, 2011

As I (and many others) had earlier guessed, Merck has disclosed that intracranial hemorrhage, or brain-bleeds were the issue with stroke patients taking Vorapaxar. This confirmation is a significant problem for the lead legacy Schering-Plough drug candidate. Expect more selling off of Merck stock on the NYSE, today.

In addition (also as I predicted), Vertex said it expects to hear fron FDA -- on Telaprevir in four months, per Reuters:

. . . .Cambridge, Massachusetts-based Vertex, which had asked the U.S. Food and Drug Administration for a priority review of data from telaprevir in November, said the agency set an action date for May 23 to decide on the approval. . . .

Wednesday, January 19, 2011

And, it may be a bit unfair, but how much faith -- here over a decade into the 21st Century -- should we put in the opinions of stock analysts still operating under a 19th Century stage-coach banner? Here's the Yahoo! news item:

Well, more charitably, I think this rating simply says that the prices of these two equities are a little below where they ought to be -- not that these two are the next Apple. That is, do your own due diligence, here. Carry on.

Heading for points east across the pond this afternoon, so if the J&J arbitration is concluded, I'll miss the first wave of coverage. Yikes; oh well.

In the mean time, though, the German edition of The Financial Times(quoted by Bloomberg) is indicating that the final, sealed divestiture bids, on perhaps $1.2 billion of the Sanofi-Merck Merial assets, being required by antitrust regulations (and regulators) in the US, Japan, Australia and Europe, are due by month's end:

. . . .Final bids for animal health assets being sold by Sanofi-Aventis SA and Merck & Co. are due by the end of January, Financial Times Deutschland reported, citing people close to the transaction who were not named.

Novartis AG, Bayer AG and Boehringer Ingelheim GmbH are among the drugmakers vying for the assets being sold, the newspaper said. . . .

I'd almost certainly add Abbott and Fort Dodge/Pfizer to that list. Of course, I cannot resist re-running the companion animal graphic of a few months back -- which also reminds us that much of this is a legacy Schering-Plough/legacy Organon business.

Senator Grassley's Concern

stats

FDA Drug Facts

CEO Fred Hassan

The Condor. . . .

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